Easter's just passed, a time to think of higher things; such
as whether capitalism can have a moral purpose.
This has become a more common question since the global
Some neoliberals say there is a moral purpose: enrichment.
Only after capitalism and its associates, innovation and
productivity growth, got going did whole populations climb
out of subsistence. Before then the quality and quantity of
life for the great majority of populations in the great
majority of areas waxed and waned with the weather, war and
other wayward factors.
Neoliberals have also argued that markets are inherently
moral because they are how free individuals trade and make
contracts and because that requires high levels of trust.
Roger Kerr, in a speech in 2008 based on a book of essays
titled Moral Markets, said that in markets each person
operates according to self-interest but that does not equate
to selfishness, which would imply people would cheat and
steal whenever they could get away with it. An
"all-pervasive" "passive altruism" dissuades us.
Linked to this altruism is trust, also "so all-pervasive that
we hardly notice it or appreciate how important it is".
"Markets are intrinsically moral because they operate - and
can only operate - on the basis of trust.
They therefore cannot be sites of pure selfishness and greed,
which militate against trust."
Mr Kerr drew from this a moral for governments: "Excessive
regulation undermines trust by crowding out the spontaneous
individual willingness to behave in a trustworthy and
Mr Kerr did not explore the counterpoint: that inadequate, or
inadequately applied, regulation was, according to most
accounts, a significant contributor to some blatantly
non-altruistic behaviour that tipped us into the crisis. Some
people lacked Mr Kerr's spontaneous trustworthiness and
Last month a resigning Goldman Sachs vice-president, Greg
Smith, called his firm's culture "toxic". Mr Smith wrote in
the New York Times of a "decline in the firm's moral fibre"
over the past decade and of senior staff talking "callously"
about "ripping their clients off".
This suggests some people in markets are a bit short on
Mr Smith said this deficiency might ruin Goldman Sachs. But
the damage is wider: those defective in altruism and trust
also give markets - at least, the capitalist version of them
- a bad name.
Here recent finance company trials have done that damage.
Some in that sector were of the sort who would pick coins out
of a beggar's hat (to reverse Mr Kerr's colourful
illustration of what passive altruists don't do).
Actually, markets do not have an intrinsic morality. They are
amoral. They are a means of exchange. Morality lies in the
behaviour of those doing the trading.
Companies are members of society, as people are. Neoliberals
say a company's focus must be on maximising returns to
shareholders, which in turn maximises the company's
contribution to society.
But in Wellington in late March Simon Longstaff of the
Sydney-based St James Ethics Centre argued for a wider role.
Companies are treated in law as "persons", with the
privileged protection of limited liability if they go bust.
That implies, Mr Longstaff said, an ethical or moral duty to
the surrounding society.
That wider duty is implied in a new Government Bill to
regulate loan sharks who fleece poor people. This follows
National Samoan MP Sam Lotu-Iiga's drafting of a Bill last
year and an earlier Labour Bill. Note also the raft of laws
since the finance sector scandals and the tighter regulation
coming for mines after the Pike River scandal.
Parliament is correcting for failures of altruism and trust.
The reason is that without ethical and moral glue a society
of free people cannot hold together. Conservatives, who want
a well-ordered society, know that well.
Some companies understand that, too. A well-functioning
society is good business. Businesses have (self-)interests
beyond the balance sheet.
So Business New Zealand is soon to co-sponsor with Every
Child Counts a series of discussions on the "wellbeing of
children". A reason: children badly brought up do not make
useful workers later.
Some companies go further and try to act ethically in
sourcing materials, in labour practices and in mitigating
their environmental impact. They back or even require staff
to take on some good works, some even in company time.
This can be good business both in staff satisfaction and
building a good brand. And it is good citizenship.
But it can be hard going. The Economist of March 31 detailed
United States fruit distributor Chiquita's efforts to behave
ethically, only to be attacked by Canada for refusing to use
tar sand oil and undermined by other companies that don't
The Easter message to those undercutters and to finance and
mine companies and Goldman Sachs is simple: behave as decent
members of society. But Easter nowadays is a holiday, not a
source of moral uplift.
- Colin James is a leading social and political